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Governors, legislators, and regulators are all mustering to help push clean energy past the starting line in time to meet Republicans’ new deadlines.

Trump’s One Big Beautiful Bill Act put new expiration dates on clean energy tax credits for business and consumers, raising the cost of climate action. Now some states are rushing to accelerate renewable energy projects and get as many underway as possible before the new deadlines take effect.
The new law requires wind and solar developers to start construction by the end of this year in order to claim the full investment or production tax credits under the rules established by the Inflation Reduction Act. They’ll then have at least four years to get their project online.
Those that miss the end-of-year deadline will have another six months, until July 4, 2026, to start construction, but will have to meet complicated sourcing restrictions on materials from China. Any projects that get off the ground after that date will face a severely abbreviated schedule — they’ll have to be completed by the end of 2027 to qualify, an all-but-impossibly short construction timeline.
Adding even more urgency to the time crunch, President Trump has directed the Treasury Department to revise the rules that define what it means to “start construction.” Historically, a developer could start construction simply by purchasing key pieces of equipment. But Trump’s order called for “preventing the artificial acceleration or manipulation of eligibility and by restricting the use of broad safe harbors unless a substantial portion of a subject facility has been built,” an ominous sign for those racing to meet already accelerated deadlines.
While the changes won’t suppress adoption of these technologies entirely, they will slow deployment and make renewable energy more expensive than it otherwise would have been. Some states that have clean energy goals are trying to lock in as much subsidized generation as they can to lessen the blow.
There are two ways states can meet the moment, Justin Backal Balik, the state program director at the nonprofit Evergreen Action, told me. Right now, many are trying to address the immediate crisis by helping to usher shovel-ready projects through regulatory processes. But states should also be thinking about how to make projects more economical after the tax credits expire, Balik said. “States can play a role in tilting the scale slightly back in the direction of some of the projects being financially viable,” he said, “even understanding that they’re not going to be able to make up all of the lost ground the incentives provided.”
In the first category, Colorado Governor Jared Polis sent a letter last week to utilities and independent power producers in the state committing to use “all of the Colorado State Government to prioritize deployment of clean energy projects.”
“Getting this right is of critical importance to Colorado ratepayers,” Polis wrote. The nonprofit research group Energy Innovation estimates that household energy expenses in Colorado could be $170 higher in 2030 than they would have been because of OBBB, and $310 higher in 2035. “The goal is to integrate maximal clean energy by securing as much cost-effective electric generation under construction or placed in service as soon as possible, along with any necessary electricity balancing resources and supporting infrastructure,” Polis continued.
As for how he plans to do that, he said the state would work to “eliminate administrative barriers and bottlenecks” for renewable energy, promising faster state reviews for permits. It will also “facilitate the pre-purchase of project equipment,” since purchasing equipment is one of the key steps developers can take to meet the tax credit deadlines.
Other states are looking to quickly secure new contracts for renewable energy. In mid-July, two weeks after the reconciliation bill became law, utility regulators in Maine moved to rapidly procure nearly 1,600 gigawatt-hours of wind and solar — for context, that’s about 13% of the total energy the state currently generates. They gave developers just two weeks to submit proposals, and will prioritize projects sited on agricultural land that has been contaminated with per- and polyfluoroalkyl substances, the chemicals known as PFAS. (When asked how many applications had been submitted, the Maine Public Utilities Commission said it doesn't share that information prior to project selection.)
Connecticut’s Department of Energy and Environmental Protection is eyeing a similar move. During a public webinar in late July, the agency said it was considering an accelerated procurement of zero-carbon resources “before the tax increase takes effect.” The office put out a request for information to renewable energy developers the next day to see if there were any projects ready to go that would qualify for the tax credits. Officials also encouraged developers to contact the agency’s concierge permit assistance services if they are worried about getting their permits on time for tax credit eligibility. Katie Dykes, the agency’s commissioner, said during the presentation that the concierge will engage with permit staff to make sure there aren’t incomplete or missing documents and to “ensure smooth and efficient review of projects.”
New York’s energy office is planning to do another round of procurement in September, the outlet New York Focus has reported, although the solicitation is late — it had originally been scheduled for June. The state has more than two dozen projects in the pipeline that are permitted but haven’t yet started construction, according to Focus, and some of them are waiting to secure contracts with the state.
Others are simply held up by the web of approvals New York requires, but better coordination between New York agencies may be in the works. “I assembled my team immediately and we are trying to do everything we can to expedite those [renewable energy projects] that are already in the pipeline to get those the approvals they need to move ahead,” Governor Kathy Hochul said during a rally at the State University of New York’s Niagara campus last week. The state’s energy research and development agency has formed a team “to help commercial projects quickly troubleshoot and advance towards construction,” according to the nonprofit Evergreen Action. (The agency did not respond to a request for more information about the effort.)
States and local governments are also planning to ramp up marketing of the consumer-based credits that are set to expire. Colorado, for example, launched a new “Energy Savings Navigator” tool to help residents identify all of the rebate, tax credit, and energy bill assistance programs they may be eligible for.
Consumers have even less time to act than wind and solar developers. Discounts for new, used, and leased electric vehicles will end in less than two months, on September 30. Homeowners must install solar panels, batteries, heat pumps, and any other clean energy or efficiency upgrades before the end of this year to qualify for tax credits.
Many states offer additional incentives for these technologies, and some are re-tooling their programs to stretch the funding. Connecticut saw a rush of demand for its electric vehicle rebate program, CHEAPR, after the OBBB passed. Officials decided to slash the subsidy from $1,500 to $500 as of August 1, and will re-assess the program in the fall. “The budget that we have for the CHEAPR program is finite,” Dykes said during the July webinar. “We are trying to be good stewards of those dollars in light of the extraordinary demand for EVs, so that after October 1 we have the best chance to be able to provide an enhanced rebate, to lessen the significant drop in the total level of incentives that are available for electric vehicles.”
As far as trying to address the longer-term challenges for renewables, Balik highlighted Pennsylvania Governor Josh Shapiro’s proposal to streamline energy siting decisions by passing them through a new state board. “One of the big things states can do is siting reform because local opposition and lawsuits that drag forever are a big drag on costs,” Balik told me.
A bill that would create a Reliable Energy Siting and Electric Transition Board, or RESET Board, is currently in the Pennsylvania legislature. (New York State took similar steps to establish a renewable siting office to speed up deployment in 2020, though so far it’s still taking an average of three years to permit projects, down from four to five years prior to the office’s establishment.) Connecticut officials also discussed looking at ways to reduce the “soft costs” of permitting and environmental reviews during the July webinar.
Balik added that state green banks can also play a role in helping projects secure more favorable financing. Their capacity to do so will be significantly higher if the courts force the federal government to administer the Greenhouse Gas Reduction Fund.
When it comes to speeding up renewable energy deployment, there’s at least one big obstacle that governors have little control over. Wind and solar projects need approval from regional transmission operators, the independent bodies that oversee the transmission and distribution of power, to connect to the grid — a notoriously slow process. The lag is especially long in the PJM Interconnection, which governs the grid for 13 mid-Atlantic States, and has generally favored natural gas over renewables. But governors are starting to turn up the pressure on PJM to do better. In mid July, Shapiro and nine other governors demanded PJM give states more of a say in the process by allowing them to propose candidates for two of PJM’s board seats.
“Can we use this moment of crisis to really impress the urgency of getting some of these other things done — like siting reforms, like interconnection queue fixes, that are all part of the economics of projects,” Balik asked. These steps may help, but lengthy federal permitting processes remain a hurdle. While permitting reform is a major bipartisan priority in Congress, as my colleague Matthew Zeitlin wrote recently, a deal that’s good for renewables might require an about-face from the president on wind and solar.
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Because you never know what’s going to take off.
Not even 12 months of unceasingly bleak climate news could keep climate tech founders and funders from getting involved in some seriously sci-fi sounding ideas. While the first half of the year may have been defined by a general retrenchment, the great thing about about early-stage venture capital is that it very much still allows for — nay, encourages — the consideration of technologies so far beyond the mainstream that their viability is almost entirely untethered from current political sentiment.
Below are seven of the most fantastical technologies investors took a bet on this year, with almost all announced in just the past quarter alone. In an undeniably rough year for the sector, perhaps VCs are now ready to let their imaginations — and pocketbooks — run just a little bit wilder.
In November, the startup Terranova emerged from stealth with $7 million in seed funding and a plan to lift low-lying areas out of flood zones by deploying robots to inject a wood-based slurry deep underground, thereby raising the land above sea level. The lead investors were Outlander and Congruent Ventures.
“Terranova’s mission is nothing less than to terraform the earth and usher in a new era of resilience and societal abundance,” Terranova’s 24-year old CEO Laurence Allen said in a press release. He cofounded the company with his father, Trip Allen, who lives in the flood-prone Bay Area city of San Rafael.
The company says that its system, which consists of three robots and one “mothership,” can lift one acre by a foot per day, making it more cost-effective than other options for defending against climate change-driven flood risk, such as building a levee or a sea wall. Already the startup has quoted San Rafael $92 million to lift about 240 acres of land about four feet.
Not one, but two space-based solar companies made headlines this year. Just this month, Overview Energy emerged from stealth with plans to deploy satellites that beam energy via lasers directly to Earth, targeting preexisting utility-scale solar farms. The company has already raised $20 million in seed funding in a round led by Lowercarbon Capital, Prime Movers Lab, and Engine Ventures, and is now raising a Series A expected to close next spring.
Back in April, another space-based solar startup called Aetherflux raised a $50 million Series A led by Index Ventures and Interlagos. That funding will support the startup’s first launch, targeted for next year, which will deploy a constellation of satellites into low-earth orbit — a far lower altitude than Overview is targeting. These satellites will also use lasers to transmit solar energy to ground stations on Earth, where the power will be stored in batteries for later use.
If these companies can prove that their tech actually works in space, they have the potential to turn solar into an always available, 24/7 resource. That’s not going to happen in the next few years, though. Overview’s CEO Marce Berte told me that the company is aiming to put megawatts of power on the grid by 2030 and gigawatts by the mid-2030s, with the ultimate goal of building a system that can deliver the equivalent of 10% to 20% of global electricity use by 2050.
Did you know that low-frequency sound waves can extinguish a fire? It’s a relatively well-understood phenomenon, but now one company, Sonic Fire Tech, has raised $3.5 million to turn this hypothetical concept into a commercial firefighting tool. With a seed round co-led by Khosla Ventures, Third Sphere, and AirAngels, the startup hopes to launch pilots with homeowners, utilities, and firefighting agencies at the beginning of next year.
As Scientific American explained, the system emits low-frequency sound waves below the threshold of human hearing, which prevent and extinguish flames by displacing oxygen away from the fuel. This deprives a potential or existing fire of the air it needs to sustain combustion. The system can channel the soundwaves through ducts atop a building’s roof and beneath its eaves, or be installed on utility equipment. There’s even the potential for a “sonic backpack,” which would offer portable protection for firefighters.
The startup’s goal is to produce 500 units by the second quarter of next year, and it’s now seeking public-sector grant funding as well as partnerships with insurance companies for its novel “infrasound-based fire suppression.”
My colleague Robinson Meyer broke the news in October that an Israeli geoengineering startup called Stardust Solutions had raised a $60 million round led by Lowercarbon Capital. The company aims to develop tech that would enable solar radiation management — an as-of-now hypothetical method of cooling the planet by injecting aerosols into the stratosphere to reflect sunlight away from Earth — by the end of the decade.
The tech is controversial, however. Many experts believe that solar radiation management systems, if they’re developed at all, should be built by governments after much public deliberation. Stardust, by contrast, is a for-profit company seeking patent protection for its proprietary sunlight-reflecting particle. While the company says that the particle meets certain standards for safety and reflectivity, it has not disclosed what those standards are or anything about its composition.
The company’s CEO, Yanai Yedvab, said that Stardust is farther along than any other research efforts, public or private. And while some dispute the viability of Stardust’s proprietary particle, the fact that the company received a vote of confidence from a prominent climate tech VC indicates that this tech is entering the mainstream. As Rob put it, “Stardust may not play the Prometheus here and bring this particular capability into humanity’s hands. But I have never been so certain that someone will try in our lifetimes.”
Though climate tech investors have poured millions into the long-held dream of fusion energy, we’re likely still a long ways away from connecting a commercial reactor to the grid. But one startup, Maritime Fusion, is already looking to put fusion reactors on ships. The company raised a $4.5 million seed round last month led by the transportation firm Trucks VC to do just that.
The startup is developing a low power-density tokamak reactor that requires less power and less uptime than grid-connected power systems. According to TechCrunch, the startup projects that its first reactor will be up and running by 2032 and will cost about $1.1 billion to build, a far lower price than reactors on land will likely command. Another potential advantage is that at sea, fusion won’t have to compete with low-cost solar and wind resources, but rather more costly green shipping fuels such as ammonia and hydrogen.
"Breakeven fusion is on the horizon, but the grid may not be the first place fusion achieves commercial success," said Maritime Fusion’s CEO Justin Cohen in a press release.
Even with the rapid rise in grid-scale batteries, pumped storage hydropower still leads the world in total energy storage capacity. But traditional pumped hydro is costly to build and only feasible in specific geographies. One startup, Sizeable Energy, thinks it can overcome these constraints by building pumped hydro out at sea, raising $8 million in a round led by Playground Global to do so.
Traditional pumped-hydro systems store energy by using excess electricity to pump water into an elevated reservoir, then releasing it downhill through turbines when demand rises. Sizeable’s concept is the same, just offshore: One reservoir floats on the water’s surface, while the other — connected by a pipe and turbines — sits on the seafloor. When power is plentiful, brine is pumped into the upper reservoir; when it’s scarce, the brine gets released. And because that brine is heavier than the surrounding seawater, it naturally flows downwards to spin turbines.
Sizable is now working to deploy its pilot plant in Italy, with the goal of installing commercial projects at a variety of sites around the world next year.
This one’s a bit of a bonus. Technically Deep Fission, a startup planning to build tiny fission reactors in underground boreholes, raised its pre-seed round last year, But this year it went public via a curious SPAC merger on the lesser-known stock exchange OTCQB, raising $30 million in the process.
The idea is that building a reactor a mile underground will save costs and enhance safety, as it negates the need for the large pressure vessels and containment structures that are typically responsible for holding a reactor in place and preventing radioactive leaks. Instead, the company says that the surrounding rock will serve as a natural barrier and containment vessel.
But as Latitude Media pointed out, some are questioning whether the recent raise will be enough for the company to build what’s sure to be an expensive pilot by next July — as it aims to do — and to deploy reactors at the three project sites that it’s already announced. Next year certainly promises to be a reckoning for the hitherto unconsidered fortunes of the underground small modular reactor industry.
Microsoft dominated this year.
It’s been a quiet year for carbon dioxide removal, the nascent industry trying to lower the concentration of carbon already trapped in the atmosphere.
After a stretch as the hottest thing in climate tech, the CDR hype cycle has died down. 2025 saw fewer investments and fewer big projects or new companies announced.
This story isn’t immediately apparent if you look at the sales data for carbon removal credits, which paints 2025 as a year of breakout growth. CDR companies sold nearly 30 million tons of carbon removal, according to the leading industry database, CDR.fyi — more than three times the amount sold in 2024. But that topline number hides a more troubling reality — about 90% of those credits were bought by a single company: Microsoft.
If you exclude Microsoft, the total volume of carbon removal purchased this year actually declined by about 100,000 tons. This buyer concentration is the continuation of a trend CDR.fyi observed in its 2024 Year In Review report, although non-Microsoft sales had grown a bit that year compared to 2023.
Trump’s crusade against climate action has likely played a role in the market stasis of this year. Under the Biden administration, federal investment in carbon removal research, development, and deployment grew to new heights. Biden’s Securities and Exchange Commission was also getting ready to require large companies to disclose their greenhouse gas emissions and climate targets, a move that many expected to increase demand for carbon credits. But Trump’s SEC scrapped the rule, and his agency heads have canceled most of the planned investments. (At the time of publication, the two direct air capture projects that Biden’s Department of Energy selected to receive up to $1.2 billion have not yet had their contracts officially terminated, despite both showing up on a leaked list of DOE grant cancellations in October.)
Trump’s overall posture on climate change reduced pressure on companies to act, which probably contributed to there being fewer new buyers entering the carbon removal market, Robert Hoglund, a carbon removal advisor who co-founded CDR.fyi, told me. “I heard several companies say that, yeah, we wouldn't have been able to do this commitment this year. We're glad that we made it several years ago,” he told me.
Kyle Harrison, a carbon markets analyst at BloombergNEF, told me he didn’t view Microsoft’s dominance in the market as a bad sign. In the early days of corporate wind and solar energy contracts, he said, Microsoft, Google, and Amazon were the only ones signing deals, which raised similar questions about the sustainability of the market. “But what it did is it created a blueprint for how you sign these deals and make these nascent technologies more financeable, and then it brings down the cost, and then all of a sudden, you start to get a second generation of companies that start to sign these deals.”
Harrison expects the market to see slower growth in the coming years until either carbon removal companies are able to bring down costs or a more reliable regulatory signal puts pressure on buyers.
Governments in Europe and the United Kingdom introduced a few weak-ish signals this year. The European Union continued to advance a government certification program for carbon removal and expects to finalize methodologies for several CDR methods in 2026. That government stamp of approval may give potential buyers more confidence in the market.
The EU also announced plans to set up a carbon removal “buyers’ club” next year to spur more demand for CDR by pooling and coordinating procurement, although the proposal is light on detail. There were similar developments in the United Kingdom, which announced a new “contract for differences” policy through which the government would finance early-stage direct air capture and bioenergy with carbon capture projects.
A stronger signal, though, could eventually come from places with mandatory emissions cap and trade policies, such as California, Japan, China, the European Union, or the United Kingdom. California already allows companies to use carbon removal credits for compliance with its cap and invest program. The U.K. plans to begin integrating CDR into its scheme in 2029, and the EU and Japan are considering when and how to do the same.
Giana Amador, the executive director of the U.S.-based Carbon Removal Alliance, told me these demand pulls were extremely important. “It tells investors, if you invest in this today, in 10 years, companies will be able to access those markets,” she said.
At the same time, carbon removal companies are not going to be competitive in any of these markets until carbon trades at a substantially higher price, or until companies can make carbon removal less expensive. “We need to both figure out how we can drive down the cost of carbon removal and how to make these carbon removal solutions more effective, and really kind of hone the technology. Those are what is going to unlock demand in the future,” she said.
There’s certainly some progress being made on that front. This year saw more real-world deployments and field tests. Whereas a few years ago, the state of knowledge about various carbon removal methods was based on academic studies of modeling exercises or lab experiments, now there’s starting to be a lot more real-world data. “For me, that is the most important thing that we have seen — continued learning,” Hoglund said.
There’s also been a lot more international interest in the sector. “It feels like there’s this global competition building about what country will be the leader in the industry,” Ben Rubin, the executive director of the Carbon Business Council, told me.
There’s another somewhat deceptive trend in the year’s carbon removal data: The market also appeared to be highly concentrated within one carbon removal method — 75% of Microsoft’s purchases, and 70% of the total sales tracked by CDR.fyi, were credits for bioenergy with carbon capture, where biomass is burned for energy and the resulting emissions are captured and stored. Despite making up the largest volume of credits, however, these were actually just a rare few deals. “It’s the least common method,” Hoglund said.
Companies reported delivering about 450,000 tons of carbon removal this year, according to CDR.fyi’s data, bringing the cumulative total to over 1 million tons to date. Some 80% of the total came from biochar projects, but the remaining deliveries run the gamut of carbon removal methods, including ocean-based techniques and enhanced rock weathering.
Amador predicted that in the near-term, we may see increased buying from the tech sector, as the growth of artificial intelligence and power-hungry data centers sets those companies’ further back on their climate commitments. She’s also optimistic about a growing trend of exploring “industrial integrations” — basically incorporating carbon removal into existing industrial processes such as municipal waste management, agricultural operations, wastewater treatment, mining, and pulp and paper factories. “I think that's something that we'll see a spotlight on next year,” she said.
Another place that may help unlock demand is the Science Based Targets initiative, a nonprofit that develops voluntary standards for corporate climate action. The group has been in the process of revising its Net-Zero Standard, which will give companies more direction about what role carbon removal should play in their sustainability strategies.
The question is whether any of these policy developments will come soon enough or be significant enough to sustain this capital-intensive, immature industry long enough for it to prove its utility. Investment in the industry has been predicated on the idea that demand for carbon removal will grow, Hoglund told me. If growth continues at the pace we saw this year, it’s going to get a lot harder for startups to raise their series B or C.
“When you can't raise that, and you haven't sold enough to keep yourself afloat, then you go out of business,” he said. “I would expect quite a few companies to go out of business in 2026.”
Hoglund was quick to qualify his dire prediction, however, adding that these were normal growing pains for any industry and shouldn’t be viewed as a sign of failure. “It could be interpreted that way, and the vibe may shift, especially if you see a lot of the prolific companies come down,” he said. “But it’s natural. I think that’s something we should be prepared for and not panic about.”
America runs on natural gas.
That’s not an exaggeration. Almost half of home heating is done with natural gas, and around 40% — the plurality — of our electricity is generated with natural gas. Data center developers are pouring billions into natural gas power plants built on-site to feed their need for computational power. In its -260 degree Fahrenheit liquid form, the gas has attracted tens of billions of dollars in investments to export it abroad.
The energy and climate landscape in the United States going into 2026 — and for a long time afterward — will be largely determined by the forces pushing and pulling on natural gas. Those could lead to higher or more volatile prices for electricity and home heating, and even possibly to structural changes in the electricity market.
But first, the weather.
“Heating demand is still the main way gas is used in the U.S.,” longtime natural gas analyst Amber McCullagh explained to me. That makes cold weather — experienced and expected — the main driver of natural gas prices, even with new price pressures from electricity demand.
New sources of demand don’t help, however. While estimates for data center construction are highly speculative, East Daily Analytics figures cited by trade publication Natural Gas Intel puts a ballpark figure of new data center gas demand at 2.5 billion cubic feet per day by the end of next year, compared to 0.8 billion cubic feet per day for the end of this year. By 2030, new demand from data centers could add up to over 6 billion cubic feet per day of natural gas demand, East Daley Analytics projects. That’s roughly in line with the total annual gas production of the Eagle Ford Shale in southwest Texas.
Then there are exports. The U.S. Energy Information Administration expects outbound liquified natural gas shipments to rise to 14.9 billion cubic feet per day this year, and to 16.3 billion cubic feet in 2026. In 2024, by contrast, exports were just under 12 billion cubic feet per day.
“Even as we’ve added demand for data centers, we’re getting close to 20 billion per day of LNG exports,” McCullagh said, putting more pressure on natural gas prices.
That’s had a predictable effect on domestic gas prices. Already, the Henry Hub natural gas benchmark price has risen to above $5 per million British thermal units earlier this month before falling to $3.90, compared to under $3.50 at the end of last year. By contrast, LNG export prices, according to the most recent EIA data, are at around $7 per million BTUs.
This yawning gap between benchmark domestic prices and export prices is precisely why so many billions of dollars are being poured into LNG export capacity — and why some have long been wary of it, including Democratic politicians in the Northeast, which is chronically short of natural gas due to insufficient pipeline infrastructure. A group of progressive Democrats in Congress wrote a letter to Secretary of Energy Chris Wright earlier this year opposing additional licenses for LNG exports, arguing that “LNG exports lead to higher energy prices for both American families and businesses.”
Industry observers agree — or at least agree that LNG exports are likely to pull up domestic prices. “Henry Hub is clearly bullish right now until U.S. gas production catches up,” Ira Joseph, a senior research associate at the Center for Global Energy Policy at Columbia University, told me. “We’re definitely heading towards convergence” between domestic and global natural gas prices.
But while higher natural gas prices may seem like an obvious boon to renewables, the actual effect may be more ambiguous. The EIA expects the Henry Hub benchmark to average $4 per million BTUs for 2026. That’s nothing like the $9 the benchmark hit in August 2022, the result of post-COVID economic restart, supply tightness, and the Russian invasion of Ukraine.
Still, a tighter natural gas market could mean a more volatile electricity and energy sector in 2026. The United States is basically unique globally in having both large-scale domestic production of coal and natural gas that allows its electricity generation to switch between them. When natural gas prices go up, coal burning becomes more economically attractive.
Add to that, the EIA forecasts that electricity generation will have grown 2.4% by the end of 2025, and will grow another 1.7% in 2026, “in contrast to relatively flat generation from 2010 to 2020. That is “primarily driven by increasing demand from large customers, including data centers,” the agency says.
This is the load growth story. With the help of the Trump administration, it’s turning into a coal growth story, too.
Already several coal plants have extended out their retirement dates, either to maintain reliability on local grids or because the Trump administration ordered them to. In America’s largest electricity market, PJM Interconnection, where about a fifth of the installed capacity is coal, diversified energy company Alliance Resource Partners expects 4% to 6% demand growth, meaning it might even be able to increase coal production. Coal consumption has jumped 16% in PJM in the first nine months of 2025, the company’s Chairman Joseph Kraft told analysts.
“The domestic thermal coal market is continuing to experience strong fundamentals, supported by an unprecedented combination of federal energy and environmental policy support plus rapid demand growth,” Kraft said in a statement accompanying the company’s October third quarter earnings report. He pointed specifically to “natural gas pricing dynamics” and “the dramatic load growth required by artificial intelligence.”
Observers are also taking notice. “The key driver for coal prices remains strong natural gas prices,” industry newsletter The Coal Trader wrote.
In its December short term outlook, the EIA said that it expects “coal consumption to increase by 9% in 2025, driven by an 11% increase in coal consumption in the electric power sector this year as both natural gas costs and electricity demand increased,” while falling slightly in 2026 (compared to 2025), leaving coal consumption sill above 2024 levels.
“2025 coal generation will have increased for the first time since the last time gas prices spiked,” McCullagh told me.
Assuming all this comes to pass, the U.S.’s total carbon dioxide emissions will have essentially flattened out at around 4.8 million metric tons. The ultimate cost of higher natural gas prices will likely be felt far beyond the borders of the United States and far past 2026.